American Pilots Won't Hold New Wage Vote

Published 8:00 pm, Monday, April 21, 2003

Pilots at American Airlines said Tuesday they won't join two other labor groups in holding a new vote on wage cuts even though they remain angry over perks given to executives.

The pilots' union could still derail the concessions by refusing to certify the union's approval of wage and benefit cuts American has said it needs to avoid bankruptcy. A spokesman for the pilots said at a news conference that union directors were considering telling the president, John Darrah, not to sign the ratification papers.

"The question has been whether we were going to have a revote, and our board has determined there is no need for one because it's in our bylaws and also explicit in the agreement itself that it does not take effect until our president signs it," said Andy Sizemore, a spokesman for the Allied Pilots Association.

"We are not saying now that we are rejecting or accepting, only that the agreement will not take effect until our president signs it, and we have not made that decision yet." Sizemore said the decision on whether Darrah would sign the agreement depends on what is "in the best interests of our pilots and American Airlines."

Also Tuesday, Association of Professional Flight Attendants spokesman George Price said the new vote will involve a 30-day paper ballot. He said details on when the revote would begin were being worked out.

The unions reacted angrily to news that American had approved bonuses and pension payments to senior executives that would be protected in bankruptcy but asked other workers to take deep pay cuts.

Chairman and chief executive Donald J. Carty has apologized several times for not telling workers sooner about the perks. The company has canceled the bonuses but not the $41 million in pension funding.

Some employees, while angry about the management benefits, still fear deeper wage cuts and more layoffs if fallout from the perks causes the concession deals to fail, prompting American to file for bankruptcy.

Shares of American's parent, AMR Corp., fell for a second straight day in advance of Wednesday's report on first-quarter financial results. Analysts surveyed by Thomson First Call expect the carrier to post a loss of $6.08 per share, or more than $900 million, for the three months ended March 31.

In trading Tuesday on the New York Stock Exchange, AMR shares fell 42 cents, or 10.9 percent, to $3.43.

This week's slump in AMR stock has erased most of the 52 percent gain from last week, when American appeared to win cost concessions from labor and step back from the brink of bankruptcy.

But investors were alarmed when the flight attendants' union and later the Transport Workers Union, which represents ground workers, announced that they would call new elections on their share of the $1.8 billion in annual cost cuts. Both unions barely approved the concessions deals last week.

Carty acknowledged late Monday that even if American can salvage the labor cost savings, it could still wind up in bankruptcy because of weak travel demand.

He said, however, that some factors are turning in the airline's future. He noted congressional approval of a $3.2 billion aid package for the airline industry and a pickup in trans-Atlantic travel in the past week _ traffic on those routes fell sharply around the beginning of the war in Iraq.

American has also begun putting into place some of the cost-saving steps in the labor-concessions package, such as reduced vacations for flight attendants.

Sizemore, the pilots' union spokesman, said some union board members believe Carty should resign, but none of the main labor groups has taken a formal position.

Carty declined to discuss his own future. He wouldn't say whether he would leave if his departure were needed to salvage the labor deals, calling it a hypothetical question.

Citing sources close to the company, cable channel CNBC reported Tuesday that some AMR board members have discussed the possibility of Carty resigning over the flap. The report said some board members believed Carty had disclosed the executive perks to union leaders when he had not.

American spokesman Bruce Hicks called the report speculation based on anonymous sources and said the company would have no comment.